Precious Metals and Capital Gains Tax

Capital gains tax applies to profits from selling precious metals, with the rate dependent on how long you’ve held them and how the investment is structured.

Physical precious metals are considered collectibles and are subject to a maximum long-term capital gains tax rate of 28%. Profits from selling within a year are taxed at your ordinary income tax rate. Some ETFs structured as trusts also face the 28% collectible rate, while other investment vehicles may have different tax treatments.

Tax rates based on holding period:

Short-term (held less than one year): Profits are taxed at your ordinary income tax rate.

Long-term (held for more than one year): Profits are subject to the long-term capital gains tax rate. For collectibles like physical precious metals, this has a maximum rate of 28%.

Specific investment types

Physical precious metals: The maximum long-term capital gains rate is 28% because they are classified as collectibles.

Precious metal ETFs: The 28% collectibles rate applies to ETFs structured as trusts that directly invest in the metal. Other ETFs may be taxed at the standard long-term capital gains rates (up to 20%).

Precious metal futures contracts: These have a unique 60/40 tax structure (60% long-term, 40% short-term).

Relevant Articles: Precious Metals IRAs and ROTH IRA

Important considerations

Basis: Your cost basis (what you originally paid) is used to calculate the gain. Special rules apply if you received the metals as an inheritance or gift.

Losses: If you sell at a loss, you can use the loss to offset other taxable gains.

State taxes: Some states have their own capital gains taxes, so you may owe state tax in addition to federal tax.

Reporting: Selling specific types of precious metals can require reporting to the IRS.

Disclaimer: Tax laws can be complex. Ric Bender does not provide tax or legal advice. This information is provided as information only. Please consult a qualified tax professional for advice specific to your situation.